I wouldn't call Sebastian Edwards (or Rudiger Dornbusch, or Eliana Cardoso, or indeed Brazilian President Cardoso) "doctrinaire neo-liberals." I do think that they (and I) believe that neo-librealism is the best bet open to Latin American countries today.
It would be much better if Latin American countries could pursue a social-democratic road to development: state-led support of rising industries a la East Asia, a heavy dose of government investment in infrastructure, a very strong government push for universal education, all supported by a strongly progressive income tax system that greatly shrank the extremes of inequality produced by the market's distribution of income.
It would be better if Latin American countries could pursue a *successful* brand of populism--one that transferred wealth from creditors to debtors by a moderate rate of inflation, used capital controls to prevent the transfer of wealth from generating large-scale capital flight, but produced a high-pressure economy in which employment was high, growth rapid, and profits of manufacturers (who would reinvest them rather than transferring them abroad) high.
But the historical experience of Latin America since World War II appears to teach the lesson that the sociological and economic class bases of the Latin American state offer powerful impediments to either successful social democracy or successful populism--industrial policies do not accelerate but retard development, state-owned enterprises do not enable higher investment but become employment sinecures for the clients of the politically powerful, progressive income tax laws raise little revenue, and attempts at social insurance produce large budget deficits that end in hyperinflation.
Hence neoliberalism, which is perhaps best seen as a counsel of despair, or of near-despair. If there is little that is worse than state-led development led by an anti-developmental state, and if the sociological and political barriers to reform of the state are too high to be overcome by even committed reformers, then perhaps it is best to try to shrink the state--get rid of state-owned enterprises in the hope that private ownership will make them more efficient, get rid of social insurance programs that do little or nothing to reduce inequality (and that instead only transfer to clients of the powerful), get rid of restrictions on trade that enrich the already-powerful rather than nurturing new industries, hope that the program of reform attracts enough investment from abroad and transfer of technology to make it possible to assemble a political coalition to allow reform to continue.
And in addition hope that increased economic contact with the industrial core will generate an accompanying flow of cultural and social patterns as well--will strengthen demands for political democracy as well as for industrial-core values such as labor standards and pollution control.
That, at least is the hope. And I do think that it is the best bet open to much of Latin America at this point. At least, I can see how the neoliberal program might succeed--and I can't see how social democracy or economic populism in Latin America today would generate a good outcome.
After all, if this year is as good a year for Mexican growth as the average year in the past decade, then this year Mexican measured real GDP will be more than 40% higher than it was a decade ago. Mexico's population growth rate is high enough that such an increase translates into less than half as large an increase in real GDP per capita--but this is still progress of a sort (albeit of a sort that leaves measured real GDP per capita lower than in the late-1970s heyday of the oil boom).
Brad DeLong